How price will continue to hinder EV adoption

There’s a significant price gap between internal combustion engine vehicles and battery electric vehicles, creating a major barrier to widespread EV adoption in the country, said the leader of the Global Automakers of Canada.

According to David Abrams, the average price of a vehicle in Canada has risen from around $44,000 in 2019 to approximately $66,000 as of recently. Meanwhile, the average used car price has essentially doubled to $36,000 over the same period. DesRosiers Automotive Consultants reported that transaction prices for passenger cars are averaging nearly $46,000 and light trucks are coming in at almost $55,000 on average.

So Canadians already face an affordability crunch there — then asking them to pay more for a new EV is out of the question for most.

“The price differential between an internal combustion engine vehicle and an EV is one of the significant considerations for consumers right now as they’re making this transition, and it’s one of the key barriers that survey after survey continues to find is a key barrier for consumers making the transition,” Abrams said at the Talk Auto 2024 conference.

He noted that while the total cost of ownership for an EV may be lower over the vehicle’s lifetime, the upfront purchase price is a significant hurdle for many Canadian consumers.

“Yes, it’s true, if you look at EVs over the course of their ownership cycle, the total ownership cost consumers will save money,” Abrams said.

“But the challenge for most consumers is they go into their transaction, or they look at their household budget, and they say, ‘Well, I’ve only got — pick a number — $700 for my [monthly] car payment. And even though I know I’m going to save more money over the longer term of owning my vehicle, I’m not prepared to pay an additional $200 [per month] to purchase a battery electric vehicle or a plug-in hybrid vehicle.’”

In addition to the price gap, Abrams highlighted consumer concerns about the availability of charging infrastructure as another barrier to EV adoption.

“The concern for most consumers as well: ‘Where am I actually going to be able to charge my vehicle once I have it?” Abrams said. “By the federal government’s own admission, they’re not where they need to be in terms of building out the infrastructure.”

He noted that while battery range is no longer a major issue, with most EVs offering at least 400 kilometres of range, the lack of a comprehensive charging network is still a deterrent for many potential buyers.

Abrams emphasized that the automotive industry is fully committed to the transition to electrification. However, he cautioned that the pace of EV adoption needs to accelerate to meet the ambitious targets set by the federal and provincial governments.

“If we want to continue to see EVs grow and penetrate the marketplace in a meaningful way, we’re going to have to have continued incentives in place,” Abrams said.